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Efective annual rate

This is a multiple choice question.

Suppose you pay 15% as a nominal annual rate on your credit card. If you make monthly payments with monthly compounding, what is your effective annual rate?

A. 1.25%
B. 15.00%
C. 16.08%
D. 18.80%
E. 19.24%

Solution Summary

The solution explains how to calculate the effective annual rate